Chinese Executives Sign Letter Denouncing Short Sellers

By Bloomberg News -
Sep 5, 2012

(Corrects to remove inaccurate reference to 360buy
investor and corrects job title of Microsoft’s Zhang in third
paragraph of story originally published Sept. 4)

A group of 61 Chinese entrepreneurs
and executives signed an open letter accusing Citron Research
and other short-sellers of manipulating information and
misleading investors in reports about Chinese companies.

Short-sellers “take advantage of the information asymmetry
between China and the U.S., and boldly tell lies, knowing that
their American readers have no way of verifying them,”
according to the letter, which has been posted to an English-
language website created for an “ongoing fight against” short
sellers.

Executives who signed the letter include Lee Kai-fu, former
head of Google Inc. (GOOG)’s operations in China, Zhang Ya-qin,
chairman of Microsoft Corp. (MSFT)’s research and development in Asia,
and Liu Qiangdong, founder and chief executive officer of 360buy
Jingdong Mall.

In response, Citron posted a statement on its website
saying that the “attack” ignored its track record of
“exposing wrongdoing in both Chinese and U.S. companies.”
Short selling involves the sale of borrowed stock to profit from
a subsequent decline.

Citron’s recent targets include Evergrande Real Estate
Group Ltd. (3333), which last month reported a 21 percent decline in
its first-half underlying profit. In a June report, Citron said
the Chinese developer “has used accounting tricks and bribes to
hide the fact that it is truly insolvent.” Evergrande denied
the report, said its cash flow is sufficient and filed a police
report in Hong Kong over allegations.